Prospective growth

The architecture in Dubai is notable not just for the remarkable buildings-it is home to the Burj Khalifa, currently the world's tallest building, amongst other similarly impressive and unusual structures-but also the non-uniform nature of the skyscrapers which line the main roads.

"Dubai is an architect's and a designer's dream," says David Semple, managing director for the Middle East at Manitowoc. Driving round the city, there certainly appears to be few limitations on ambition or imagination. "The region is a playground for architects," says Jens Kotzurek, sales director for tower cranes at Liebherr.

"There's no standard type of building or project, and all crane types are here." Back in the second half of the last decade, this lack of limitations was brought to a grinding halt when the recession took hold. Cash flow slowed, investments were lost, some projects were left half-finished and others were not started at all.

"In Dubai there was a strong boom until 2008, but it was not controlled," says Semple. "The market was unsustainable and overheated, with too many buildings planned. Then when the recession began, there were problems with funding and projects stalled-buildings were only partially completed or construction hadn't even begun and investments were lost. It's taken five or six years to flush this speculation out of the system."

Charles Govias, operations manager at Al Faris, says: "In 2008 we were running three jobs every day, but in that situation the demand was fictitious-now we are operating in reality again."

The effect this boom and bust had on crane sales was reflected in the business conducted by NFT, the leading tower crane supplier in the region.

"In 2005-8 sales were very high-the ratio of sales to rental was around 80:20," says Nabil Al Zahlawi, managing partner at NFT. "Then companies started renting more than buying as there were gaps between jobs-now the ratio is more like 20:80. Rental has increased due to the lack of Cash flow and liquidity."

Working through the dip The UAE had already seen some remarkable growth in recent times-to travel between Dubai and Abu Dhabi 50 years ago required driving along the beach, says David Moore at offshore specialists EnerMech. Now there is a main road with four lanes in either direction, he says, which is busy almost all of the time.

But when the most recent boom in construction was curtailed, many of the companies in the region were able to turn to the petrochemical industry for business, both in the UAE and in neighbouring countries. "The oil market usually opposes the general world economy, so therefore in 2009 the oil business was good," says Moore.

For some of the companies in the region, this meant focusing on Saudi Arabia. "By the end of 2008 the market in the UAE was very bad, but by the third quarter of 2009 there was some recovery in Saudi Arabia," says Al Zahlawi at NFT.

"In 2009-2013, we focused mainly on Saudi Arabia, before spreading our focus again in 2014," says Manitowoc's Semple. "Saudi remains strong-it survived the effects of the recession due to the structure of its economy. There is less lending there, as the banks are more conservative, and there are more domestic investors. The country also has huge reserves of oil and gas, as well as foreign currency."

The high stakes involved in the oil industry, in terms of both wealth produced and the importance of safety, create opportunities for business in the sector, he adds: "The petrochemical industry will pay as much as they need to for good service, due to the amount of money produced by the sector-this is not so much the case with the construction industry."

At Masters Crane-the oldest mobile crane company in the UAE, says the company-the shift in the market inspired a change of set-up, with the family-run business bringing in general manager Abraham Habbi.

"The owners of Masters Crane wanted to restructure the company, following the ups and downs in the business after the recession which caused a drop in prices in the UAE and movement of business to Saudi Arabia," says Habbi. "The company owners wanted more sustainable performance, and to be able to predict profits."

Cautious growth

While the Dubai construction market is now much more healthy than five years ago, there is a more moderated approach to growth. This is due both to lessons learnt from recent economic problems, and regulations introduced by the local government as a response to the effects of the crash.

"To prevent the same problem happening again, there are now regulations in place, including investment deposits being increased and restrictions on who banks can loan money to," says Semple. "As a result of this, and the lessons learnt from 2008, we are seeing much more controlled growth."

Keonne Pinto, director at Al Faris, says: "The government has introduced financial regulations, so projects are now more stable. Escrow accounts are now used for builders, and a deposit is required. This has created more confidence in the market.

"Some of the cranes previously used in the region were quite old, but there are now strict controls in place concerning age and specifications, which is good for Al Faris."

Cashflow bottleneck

As well as the new regulations and a more cautious approach from developers, growth in the region is currently being held back by a lack of cashflow and liquidity-a hangover from the recession. But the expectation is that once this has been worked out of the system, a strong future awaits.

"The biggest problem is freeing up finance. There's a lag from the recession," says Pinto. "To move halfdone projects on, the government has instructed banks to take them over."

Christian Kassner, senior manager of sales and customer support at Terex Equipment Middle East, says: "Overall the market is well. The key to success for our customers in the rental sector is to manage their accounts receivables. For Terex, the market is good because we can offer customised solutions, making the difference. There is increasing understanding of the cost of ownership of cranes, and how Terex's cranes can improve this-such as with single-engine concepts, and the interchangeable components on the five-axle all terrain Explorer family."

Habbi at Masters Cranes says: "In 2013 there were quite a few cranes on standby-operation was around 80%. It's now at 85% but previously had reached 70-75%, which is not sustainable. There are a lot of singleoperator crane companies currently, all competing with the larger crane companies. They're able to lower prices and to use secondhand cranes. This will change when cashflow improves."

The construction market should be on the up again by the end of 2015, says Al Zahlawi at NFT: "Last year we saw recovery in the UAE. 2014 was very positive, and although the fourth quarter was slightly slower, we will hopefully see further recovery in the second or third quarter of 2015. This is not a crisis or a recession-it's a transition between a bad period and a good period. There is less demand in real estate and other sectors, but the construction market is not related to the oil price, it's related to demand. The market will increase-not yet, but in the next 6-9 months."

While cashflow is slow to be freed up, local legislation does inspire confidence in companies to continue to do business, says Tony Nuyts, branch manager at Aertssen Machinery Services, based in Abu Dhabi: "The issue of cashflow is a big challenge facing companies worldwide, but although people won't pay until they've been paid, in this region they do trust that they will get paid eventually- in other regions companies can go bankrupt more quickly. Here if you write a cheque and it bounces, you can face jail-so the regulations are more conducive to a stable market."

Oil price impact

The price of oil has fallen dramatically in recent months, from $115 a barrel in June 2014 to below $50 a barrel this year. The prevailing attitude in the regional crane industry is that while the situation needs to be closely monitored, the immediate impact of the price dip should be very moderate.

"We have not seen any drastic fluctuations in the equipment industry, although in general there is a cautious approach since the last few months due to the drop in oil price," says Ajit S. Nair, regional brand manager for the UAE, Saudi Arabia and Bahrain at Kanoo Machinery. "There may be changes in 2016, but for now there are many ongoing projects, some more are expected to be announced in 2015 and we hope this trend will continue."

Tony Nuyts at Aertssen says: "The drop in oil price is not a problem at the moment-the projects which were in the pipeline are going ahead. There has been some impact, with Shell cancelling a project in Qatar and some uncertainty over a project in Kuwait. "The region could artificially inflate the price of oil by stopping production, but I get the impression that the producers don't want to, because production is very efficient here, so they can handle the lower oil price. However, it might be a problem if the price stays low long-term." David Semple says: "Everything is being funded by petrochemical and hydrocarbon products, and if budgets become less ambitious then that would affect the crane industry. But the question is when should oil companies slow down production-reserves of currency can sustain investments, and the price of oil should increase again soon. Having said that, the price of oil did drop more quickly than expected, and after learning lessons from the recession people are more cautious."

"The oil price is our main concern currently," says Kazuumi Hiwatashi, general manager at Tadano Middle East in Dubai.

Shinichi Iimura, executive officer at Tadano's international sales division, says: "All manufacturers are interested in the impact that the oil price fluctuations will have, either positive or negative. There is currently an oversupply, but demand is also increasing-the China market is unstable in terms of demand but in general, in South East Asia and in the US, oil demand is increasing.

"That is the main difference between 2008 and today-in 2008 when oil dropped, the economy dropped first, but today the economy and oil demand are both not bad, but the oil price has dropped and stayed at a low level. There may be some negative impact in Saudi Arabia, but not a huge amount. We could expect increased demand from construction projects."

Habbi at Masters Crane is more positive: "The construction sector will double from the end of 2015 to 2018-9," he says. "There is no slowdown forecast in the UAE or in Saudi related to the oil price, and the markets can sustain operations for more than a year. The projects that are under construction have already been budgeted for, and although there may now be a delay in setting up new projects, the market is covered until 2016-8."

David Moore at EnerMech is also looking forward to further growth in the sector, in Saudi Arabia and certain other nearby countries: "We have not seen a slowdown in the oil market yet," he says. "Drillers are forecasting a slower year, but offshore projects in Abu Dhabi are still going ahead.

"For EnerMech, the next big thing in Saudi Arabia is the offshore market. We are aiming to station a 'flying squad' of service and support engineers in the country, as we expect to see growth in the market in 2015. We already have a large team of cranes and lifting personnel in the region, including six specialist crane technicians, who are based in Abu Dhabi and provide flying squad support for the Middle East region.

"There are not many non-domestic offshore cranes and lifting companies that have operated in Saudi for long- it is mostly state-run and focus is mainly on local companies. However, EnerMech has reached a big enough size to make people in the market feel comfortable in giving us major contracts to run.

"The Qatar market is significant for oil and gas, as is Abu Dhabi. Kazakhstan, Azerbaijan and other markets around the Caspian also have huge potential for us."

Further opportunity is presented by markets that are traditionally reliant on oil production, such as Saudi Arabia and Abu Dhabi, investing in other areas including infrastructure and alternative power.

Edward Talbot, general manager at ALE in Abu Dhabi, says: "The drop in the oil price will have an effect, but we're not sure how big it will be. Some regions are less sensitive to it. Abu Dhabi's economy is fairly reliant on oil but the city has a 20-30 year plan to expand its infrastructure, which will also provide business.

"The local market is not just driven by oil-there is also growing interest in green and renewable energy, such as the such as the recent Dolwin Beta HDVC Platform for the wind sector. The topside and substructure were constructed in UAE and mated by ALE using a bespoke gantry system."

Kassner at Terex says: "Oil and gas has been the driver between 2009 and today, and while the price of oil is now under pressure, investments in the infrastructure sector will keep the flow going. Saudi Arabia is the leading area for infrastructure investments, with cities being expanded and new housing built."

Saudi and beyond

This investment in Saudi's infrastructure was inspired in part by unrest in the region in 2011, and the state's subsequent decision to fund projects such as housing, hospitals and transport. It's one of many areas currently growing, both in Saudi Arabia and nearby countries.

"There is huge expansion in infrastructure at the moment, in areas such as housing, transport, power plants, desalination plants, and so forth," says Nair at Kanoo, which represents Grove cranes in the country. "The Riyadh metro system, which uses overhead lines, is currently being constructed, and the King Abdullah Economic City project which includes King Abdullah port, industrial valley, coastal communities and Hijaz downtown is also being executed.

"We have a network of offices in Eastern, Western and Central provinces of Saudi Arabia offering sales and after-sales solutions to our customers. We are still expanding and have plans to open few more offices across the country in the near future. Our key strategy is to provide the very best of products and services, thereby partnering with our customers in their growth path."

Habib Mikati, managing director for Middle East & Africa at Wolfkrann, says: "There is some great work taking place in Saudi Arabia. We have more than 150 cranes in Mecca, and more than 200 in Saudi Arabia, including Wolff 355B cranes working on the Kingdom Tower, which will be the last crane on the project to be dismantled.

"The mosque at Madinah is being expanded-it is currently 16,900sq m and will become 98,500sq m. At Mecca the Haram, which is visited by 3-4m people each year as part of a pilgrimage, is also being extended."

Al Zahlawi at NFT says of the tower crane business in the country: "We have lots of presence in the country- we have around 100 cranes in the King Abdullah Financial District, and sold 45 tower cranes in six months. We provided 150 Potain cranes to the Princess Nora bint Abdulrahman University project in Riyadh, including selling 40 of them. Mecca is also expanding-the city is always short on accommodation so there is private investment in housing and hotels."

"Saudi is booming, and has big, long-term plans for expansion," says Jens Kotzurek at Liebherr. "Doha is becoming as impressive as Dubai- there has been a lot of investment in hotels in both of those regions, as well as in Abu Dhabi."

Hiwatashi at Tadano says: "Qatar is continuing to develop ahead of the World Cup, and there is a lot of other investment planned for the country, including transport links. In 5-10 years the capital Doha will be very different to how it is now.

"30 years ago, Iran and Iraq were the main markets for the energy sector-now Saudi Arabia is the biggest."

The big kick-off

The forthcoming FIFA World Cup in Qatar has given Aertssen a boost, says Nuyts, although there can be issues getting equipment to the country. "We opened a branch in Qatar six months ago and our first contract is for the Khalifah stadium, the first to be constructed for the World Cup," says Nuyts. "We're providing two Terex CC2400/1 cranes and a CC2800/1- the first crane is already there and the second has been ordered.

"2015 has already been very good in Qatar, mostly inspired by the World Cup-not just the stadia but also transport infrastructure projects, including the metro, bridges and highways. They are expanding step by step.

"In the UAE there are regulations demanding that off-shore machinery is no more than five years old, and equipment working in Qatar on the metro project can be no older than seven years. These high standards suit our company.

"Moving machinery into Qatar from the UAE is expensive and timeconsuming- it takes nine days due to passing through the Saudi Arabian border."

The variety and geographical spread of current projects has encouraged ALE to diversify, says general manager Talbot: "We have diversified not just in the areas where we now operate, but also in the services we provide such as engineering support both onshore and offshore.

"In the UAE the focus for immediate development lies in off-shore projects, particularly in Abu Dhabi, while in Qatar, Oman and Saudi Arabia we are heavily involved in infrastructure and onshore projects. The oil, gas and power sectors remain at the core of our business and in Iraq we have serviced these markets for for years, including major projects from our facility near to Umm Qasr Port in the south and more recently out or Erbil, in the north.

"In Iraq we also support operational facilities and plants, by supplying permanent crane and rigging support to projects where we have invested in new equipment and training of our local personnel, to successfully support the industry and our clients. Outside of Iraq we are also continuing to invest in equipment to meet project demands and specific market sectors; the civils and infrastructure sectors, for example, will benefit from the introduction of additional semi-trailers to cater for a higher turnover of out-of-gauge movements on projects such as the Riyadh Metro in Saudi Arabia.

"In Oman, ALE now operates as a stand-alone entity that can support the countries major developments both in lifting and transportation by land and sea. Our office in Muscat will support initial project operations in Sohar to the north."

Bright future for the UAE

There is an equally positive outlook in both Dubai, with its focus on tourism and construction, and oil-focused Abu Dhabi. There are plans to both expand and to diversify, says David Moore at EnerMech: "There is now a second airport planned in Dubai, and increased focus on tourism in Abu Dhabi to help balance its reliance on oil."

The area has been able to expand partly because it attracts investors from the region and beyond, says David Semple: "Part of the reason Dubai has so much wealth is that there is a funnel effect-it attracts investors from all around the region, because it is such a welcoming place to live."

"The UAE is very safe, but also liberal," says Tony Nuyts. "They are currently building Catholic churches in the country. It is set up for international trading, and for expats to live here- they are needed to contribute to running projects here." The world's attention is also being turned towards the UAE as preparations begin for the World Expo taking place in Dubai in 2020. The attraction of the area is manifesting itself in projects across the region, with the Western companies who are welcomed into the country offering their expertise.

"The successful bid for the World Expo 2020 has also stimulated growth and recovery in the construction sector, as the government wants to ensure there are no half-finished and stalled projects by the time of the Expo," says Semple.

"2014 was a very good year, and there are lots of prestigious projects being built, particularly by statecontrolled developers such as Emaar and Nakheel.

"The tower crane and crawler crane sectors are growing evenly at the moment. In 2014 there was a strong pick-up in the tower crane market, thanks to the recovery in Dubai- levels were below the boom of 2007 but higher than 2010-13, and are sustainable. Many of the cranes sold in 2000-5 are still being used.

"The crawler crane market serves the oil and gas sector, and it's business as usual. The average life of a Grove is at 15-20 years, but because of the high stakes in the oil and gas sector, there are no chances taken- companies tend to rent newer cranes." Al Faris, which has around 600 cranes in its fleet, is currently building a new premises in Dubai Industrial City, which will be larger than its facility in Jebel Ali. The AED77m ($26m) project is due to be completed in mid-2015 and will include a workshop for the maintenance and dispatch of cranes.

The company recently worked on the latest nuclear power facility at Barakah-one of four planned for the location-providing transportation, cranes and hydraulic trailers. In the pipeline for the near future includes a project to build 3,200 villas over an 18-month timescale, which will require 32 RTs, says operations manager Govias-the company will also assist with Arabian World, a 6.5km shopping centre with residential and hospital facilities.

Mikati at Wolffkran says: "The UAE market over the last 12-18 months has been picking up. Dubai is reliant on tourism and therefore on the world economy-unlike Abu Dhabi, which has a steady income from oil. But while there are currently some cashflow issues, the market will be huge by late 2015 and 2016. Dubai will continue to grow, and Abu Dhabi is also seeing more steady growth."

At Masters Crane, the company plans to take advantage of the growing market with growth plans of its own. "We operate in a range of niche sectors to ensure a steady performance," says Habbi. "As well as the oil and gas market, we work on the shutdown and maintenance of plants. This is cyclical work, as maintenance is scheduled and takes place at regular intervals. We keep notes of how each maintenance job was done, enabling us to gain experience for the next time. We are also looking to move into the maintenance of oil pipelines, through the oilfield companies.

"We have around 185 cranes in our fleet, between 25-500t. We currently have eight or nine different brands in our portfolio, and we plan to reduce this to just two or three established brands, such as the German and Japanese companies. We plan to sell off our cranes that are 5-8 years old and replace them with newer models, while maintaining the capacity range.

"We supply full-time operators; part-time operators are costly and not as experienced. We have a training facility at our new office in Sharjah, with a former crane operator providing training." NFT, the exclusive dealer for Potain tower cranes in the UAE, has a 60% market share in UAE and Saudi Arabia, says Al Zahlawi.

"We supply projects in the oil and gas sector, including gas tankers and power stations, and the ongoing Phase 1 project of the new nuclear power plant in the UAE," says Al Zahlawi. "We will be supplying more cranes to the second plant, with construction due to begin around now-that is the biggest project for us at the moment.

"Construction for the 2020 Expo will begin later in 2015-the projects take six months to a year to plan before building begins.

"There is demand for more modern cranes-customers want features such as easier erection and less power consumption. We are one of the few companies currently looking to invest- we have 150 cranes ordered, to meet the demands of the market. These are mostly high-rise tower cranes, particularly in the 400-600m range. "We recently added our anti-collision system-it is not mandatory in the market yet but we work to international standards, and on prestigious projects customers appreciate and want the best technology.

"A recent turn-key project involved placing the roof on a museum-we supplied a total of 12 mobile and tower cranes, as well as operators and engineers. It has been going on for almost 24 months and is due to be completed later this year.

"Abu Dhabi is currently focusing on cultural projects such as museums, with three planned including the Guggenheim Abu Dhabi which has required lifting of large, 140m-long steel structures."

European experience has proved valuable to Aertssen in the region, says Tony Nuyts: "In the UAE we focus on the oil and gas sector, and on new building projects-particularly the oil and gas sector as we are focused on the longterm use of mobile and crawler cranes.

We supply Tadano telecranes and Liebherr and Hitachi/Terex crawlers as they are simple and easy to use, and very good quality-and they are stable in the heat and humidity of the summer.

"We are quite new on the market but we have brought know-how from Europe, such as providing threedimensional lifting plans for projects, and servicing expertise. We aim to be flexible but also easy to work with-we offer a range of machines but have the same contact person for pre- and post-sales, making it easier for our customers to contact us when they need to.

"We don't have a hundred customers, and we don't want that many-we want to be able to focus on providing the best service. "Customers in the region want the same level of safety as in Europe, which as a company with experience in the European market enables us to provide added value. We are more expensive compared to a small local company, but we provide better safety, maintenance and service engineering- we provide breakdown repair within 24 hours."

And at ALE, the company's latest technology has enhanced its capabilities in the region, says Talbot: "Innovations such as our containerised heavy-duty laced tower system and the new ALE Trojan truck are helping to provide solutions to problems that previously limited design-for example the Trojan trucks, which were developed in house by ALE UK and due for delivery to UAE this year, will provide increased pulling power and efficiency to our fleet by providing the capability to pull gross loads up to 300t at 14% gradient."